Mayor Brandon Johnson campaigned on a promise to eliminate the “sub-minimum” wage for tipped workers to level the economic playing field for wait staff working on the front-lines of Chicago restaurants.
On Wednesday, the mayor took a giant step toward delivering on the promise. But the celebration was tempered by concern about a loss of jobs, hours and tips.
By a 9-3 vote, the City Council’s Committee on Workforce Development signed off on a compromise that will give Chicago restaurants five years to absorb the 66% increase in labor costs.
It calls for tipped workers — currently paid $9.48 an hour, whichi is 60% of Chicago’s $15.80 minimum hourly wage — to receive 8% annual increases on July 1. That base pay will go up 8% a year on every July 1 through 2028. The minimum wage also is adjusted annually to match the cost of living.
“I want to thank our mayor for living up to the promises that he made on the campaign trail,” said Ald. Jessie Fuentes (26th), who negotiated with the restaurant industry on Johnson’s behalf.
“We cannot say that we want Black and Brown women to thrive. We cannot say that we want communities on the South and West Sides to be economically viable if we’re not willing to pay our people the minimum wage.”
When the “Fight for $15” was taking place, tipped workers were told by the hospitality industry, “You need to wait. It is not your time,” Fuentes said.
“Someone tell me when? They have the answer: Now. ... Our mothers, our families deserve security. Not only do they deserve housing security. They deserve financial security and that is what we are talking about today.”
Even with the longer runway, Illinois Restaurant Association President Sam Toia said he remains concerned that increased labor costs will force family-owned neighborhood restaurants to reduce hours or eliminate jobs.
He nevertheless agreed to swallow the five-year phase-in.
“Change is always difficult, but negotiations require concessions. This is not a perfect solution. … While we disagree with the city’s decision to move forward, it’s a compromise we can live with” because it gives the restaurant industry “time to adjust to the new financial reality,” Toia said Wednesday.
Wait staffers who testified during the public comment session preceding Wednesday’s vote were similarly divided.
Some were concerned that, when customers tired of tipping find out about the higher wage imposed by the city, they will tip less, leaving workers with less money — not more.
“I fear a mass exodus of service workers, including myself, who no longer want to subject themselves to the difficulties of this work for less pay. I fear menu prices going up and restaurants being incredibly short-staffed and, potentially, the quality of service will take a nosedive,” said server Karylin Veres, whose father is a chef.
“Restaurants will close. There is no way that my family could have kept their restaurant doors open if this had taken effect back then.”
Veres closed by saying, “I love the idea of tips on top of the minimum wage. But I can almost guarantee that’s not gonna happen. We’re not gonna get tips extra. They’re gonna see minimum wage and that’s gonna be it. And that’s a huge pay cut for me and my fellow workers.”
Proponents of eliminating the sub-minimum wage stressed it won’t trigger a pay cut.
In fact, in the seven states that already have eliminated the “sub-minimum wage,” hourly pay actually increased, according to Saru Jayaraman, director of the University of California at Berkeley’s Food Labor Research Center who serves as a champion for the national “One Fair Wage” campaign.
Ald. Carlos Ramirez-Rosa (35th), the mayor’s City Council floor leader, condemned as “fear mongering” the claim that tipping will decline when wages go up.
Restaurants are already required to make up the difference whenever tipped workers now paid $9.48 an hour don’t make enough tips to reach the $15.80 hourly wage that applies to all other Chicago workers. But they don’t, particularly for waitstaff who are women of color.
“I have spoken with so many workers on the margins — undocumented people who are afraid to report their employer for wage theft. Who have been threatened with ICE being called on them because they have stood up and said, ‘You’re supposed to pay me the full minimum wage if the tips don’t get me there.’ This is why we’re fighting for this issue,” Ramirez-Rosa said.
“Some employers have lied to their employees and have brought them here to yell at women of color that are fighting for a fair wage, that are fighting to stop this practice that has led to harassment. That has led to poverty. That has led to exploitation,” Ramirez-Rosa said, his voice rising with emotion.
“Cities across this nation with economies very similar to ours have already instituted ‘One Fair Wage’ with tips on top; Restaurants are opening up. Restaurants are employing more workers and workers are making the same or more in tips. San Francisco had the highest national average on tipping. They are a ‘One Fair Wage’ city.”
The argument was not enough to satisfy committee members, including Ald. Brendan Reilly (42nd), whose downtown and River North ward is the epi-center of a culinary scene that is a cornerstone of the tourism industry.
With notoriously narrow profit margins, Reilly warned that restaurants will have “no choice but to pass these costs onto their customers.” He warned of the “law of unintended consequences” where menu prices go up, restaurant business declines, more restaurants close, as they did during the pandemic and Chicago loses a chunk of what attracts tourists.
“It’s gonna impact many, many lives at a time when the restaurant industry is just climbing out of the ditch and has a ways to go,” said Reilly, who did not vote because he is not a committee member.
Reilly said he commends the “intent” of the sponsors, but “I live in reality and there are consequences that come with these policy changes. ... We saw what happened to this industry when people decided to dine at home. It had a devastating impact. Chicago lost dozens of restaurants.”
Ald. Marty Quinn (13th), Derrick Curtis (18th) and Nick Sposato (38th), whose wards border the suburbs, voiced similar concerns. They cast the three “no” votes.
“It’s so hard to get businesses to come on the Chicago side,” Curtis said. “It’s a struggle being on that border and seeing a business come up across the street.”